A Change Management Methodology for Payroll Software Implementation

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By Dave Foxall

Changing the Payroll Solution without Changing the Workforce

In Personnel Today’s Six Reasons Why Projects Fail, it was discovered that “the Standish Group suggests that less than 50% of software projects in large organisations will meet their objectives”-which, while staggeringly high, pales in comparison to Gartner research’s failure estimates. What’s unfortunate though, is that the biggest culprit for these failures (i.e. your payroll software’s stakeholders) can be fixed. As Forrester’s Claire Schooley opines though, “Helping people who will implement the new processes accept and even embrace change is usually an afterthought.”

Taken together the above quotes serve to highlight the fact that when it comes to implementing payroll software, organizations often allocate resources to technical issues (e.g. specifications, platform integrations, systems testing, parallel processing and data migration) only to neglect the ‘people angle’ of the implementation project-usually resulting in a vastly reduced return on their investment. Implementing a new payroll software solution is a large-scale change with impact on every employee. As such, employee response to that change must be analyzed and managed alongside the more mechanical aspects of the project.

Personal Responses to Payroll Change

Individuals responses to significant change tend to follow the key stages originally identified by Dr. Elisabeth Kübler-Ross and applied to the workplace through the research of Lewis and Parker. A 4-stage version of the process is: Denial, Resistance, Exploration, and Acceptance. The key to managing people through the software implementation is to apply a variety of strategies to support employees in their transition from one stage to the next, with the goal being full acceptance (i.e. adoption and usage) of the new payroll system. Of course, an understanding of emotional responses to change is useful, but implementation managers need a systematic way of applying this knowledge for practical effect. Prosci’s ADKAR methodology (standing for Awareness, Desire, Knowledge, Ability, and Reinforcement) is a pragmatic approach that is well-suited to software implementation.

Managing Change Responses with ADKAR

The table below briefly defines each change stage and matches it to the recommended ADKAR strategy:

Emotional Response

The ADKAR Methodology

Denial – In this initial stage, the individual minimizes the potential impact of the change, telling themselves that it will have no effect. Employees who are ‘in denial’ are difficult to engage in the implementation process.

Awareness – By increasing employee understanding of the reasons for the new software, the details of the ‘burning platform’ that makes the current situation unsatisfactory, they can be moved out of the Denial stage. This first wave of communications cannot start early enough and ideally should be part of the consultations that take place as part of creating the original business case.
Gartner’s Donna Fitzgerald recommends leveraging non-traditional methods: “Understand the social network of your organization. Know who people turn to for help, advice and leadership and ensure they are either on board with your project or that they have agree to at least adopt a wait and see attitude.”

Tip: Communicate the facts and the headline wider impacts of the payroll system throughout the organization; make it real for people.

Resistance – The individual has accepted that change is happening but wants no part of it. An appetite for the new system must be created – i.e. make it preferable to the current state – to avoid people slipping into feeling powerless and ‘put-upon’.

Desire – The focus here is on motivating employees to want the new software. Whether people are pulled towards its advantages or pushed towards it by the disadvantages of the old system, creating impetus is important.

Tip: Engage via a wide variety of means; listen, show understanding and fellow-feeling but also create a desire for the change by highlighting benefits for different stakeholder groups.

Exploration – Individuals begin to let go of old working methods and test out the new. This is inevitably where issues are raised – both questions of user ability and of system operability and integration.

Knowledge – A targeted training strategy supports employees with the knowledge and skills necessary to operate and fully leverage the new software.

Ability – For the new technology to be fully leveraged, new skills must be embedded; ‘knowing’ is not the same as ‘doing’. Post-training (and post-implementation) support such as practice scenarios, power users, and ‘just-in-time’ resources are essential to success.

Tip: Acknowledge and recognize employee’s increasing engagement with and use of system functionality. Provide clear channels for raising questions and issues and ensure that response times are rapid.

Acceptance – This stage is the normalization of the new ways of working; the new system is now fully integrated into the workplace.

Reinforcement – The final step in the ADKAR process is about embedding the learning and good practice that has been established. A successful go-live must be maintained (and improved upon) through a variety of maintenance and reward measures. Andrew Pearson, writing in the May 2011 Pay & Benefits magazine emphasized, “Regular positive reinforcement can go a long way when implementing a project company-wide. Reward those involved for their accomplishments, such as getting payroll processed properly and on time. Praise and recognition are often incentive enough to encourage positive behaviour and enthusiastic involvement.”

Tip: Continue the communication campaign with more advanced information (and where necessary, training) on payroll integration with other business systems and maintain the momentum to maximise utilization. Communicate user successes and case studies and provide evidence of the promised benefits being realized.

The Payroll Software Change Management Bottom Line

The ADKAR methodology is just one potential approach to systematically managing employee reactions to the changes that accompany a new payroll solution. The bottom line is the requirement for a clear strategy when it comes to implementation change management. Whatever strategy or method is used, it should come from a rigorous stakeholder analysis exercise that identifies needs and concerns from employees to the C-suite; built on a foundation of specific business goals to which the software can realistically contribute. Further, it should be embedded in everything from your communications about the new system to your actual payroll software implementation training regimen for users-drilling home the idea until it becomes second nature.

Gartner’s Donna Fitzgerald recommends leveraging non-traditional methods: “Understand the social network of your organization. Know who people turn to for help, advice and leadership and ensure they are either on board with your project or that they have agreed to at least adopt a wait-and-see attitude.””